Oil price, Amerisur, Reabold, Union Jack And finally…
WTI $52.51 +23c, Brent $62.01 +70c, Diff -$9.50 +47c, NG $2.39 +6c
Oil price
Uncertainty is the watchword in the oil market at the moment so daily movements, apart from being harder than usual to forecast are based on what politicians do, never the best basis for sensible analysis. The three reporting agencies came in last week and whilst they differed in a number of areas they all put in a fairly strong 3Q on fundamentals, as for the 4th, that’s a different story…
Whether trade wars or physical violence in the Gulf precipitate any demand falls, or temporary shortages, you can be sure that somewhere a politician has been behind it. On the basis of that, at the moment expect a spiky, turbulent market.
Two announcements from AMER this morning with the result from the Sol-1 well of most interest. With logging complete, 26.5 feet of net oil pay in the LS3 and 10.5 feet of net oil pay in the LS1 sands of the Une formation were identified and short term testing operations are now underway. Whilst the find seems ‘smaller than previous discoveries it demonstrates potential for further prospectivity across CPO-5’ according to CEO John Wardle who I’m sure will be able to announce an oil discovery after testing. Right now the rig moves to Indico-2 for the appraisal well with the aim of further confirmation of the resources on this prolific block.
The company also announced that it had disposed of 50% of its interest in the PUT-8 exploration licence to Occidental for $19.1m. This was acquired under rights of first refusal when the Vetra deal was done in March and while AMER keep the operatorship they pass on the stake at cost to new partners at Oxy. A very sensible move which boosts their cash balance and keeps them on an even footing with Oxy in the upcoming drilling programme. All in all Amerisur shareholders should be very happy with the way things are going operationally for the company and I expect this to continue for the foreseeable future.
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Reabold with a 24% interest through its 36% stake in Rathlin Energy and Union Jack with its 16.665% stake have announced that the West Newton well is a discovery with both gas and liquids encountered which are ‘at least’ as big as the pre-drill estimate of 189 BCF of gas, equivalent to 31.3 mmbo. If proved this would make it potentially the largest UK onshore gas field and should the liquids prove to be oil rather than condensate then it would be the largest hydrocarbon since 1973.
The net 65-metre hydrocarbon saturated interval that was encountered in the Kirkham Abbey formation indicates a substantial hydrocarbon accumulation including a significant liquids component as above which has significantly exceeded expectations. These expectations were based on the CPR done after the West Newton A-1 well which the initial petrophysical data set so far achieved from the A-2 well ‘correlates positively’ with, indeed as I understand it every single data point is better. I would assume that if such things as porosity, pay zones, and the absence of any water are good and if the core data shows good gas leakage then the previous CPR numbers could easily be surpassed, possibly by a good deal.
The liquids component is also more than important to the economics of the field as they can be brought on stream more quickly than the gas and therefore bring in welcome revenue. Also it is worth bearing in mind that the well encountered hydrocarbon shows from the secondary Cadeby formation’with an oil saturated core’. Whilst I understand that this hasn’t been tested at this well there are two wells planned for the ‘B’ site where the company says that ‘optimal reservoir development is expected’, this may be code for testing of the Cadeby formation then.
This well has clearly exceeded expectations on a number of levels and will give the participants multiple opportunities as to where to go from here. I would expect serious industry interest that would give an opportunity to farm-down should any of them wish to do so, having said that who would want to sell the goose that has just laid the golden egg? As I write Reabold shares are up 33% and Union Jack up 50% which is understandable given the need for profit taking after such a run but no way takes into account what value has been generated by this find for both these companies, transformational, I should say so…
And finally…
The CWC continues as England easily beat the Windies on Friday but suffering two injuries in the process, Morgan should be OK but Roy is out for at least two matches. Australia looked confident against Sri Lanka who might have given them a scare if not for giving wickets away from a position of strength and of course in the massive India v Pakistan game yesterday India came out cruising.
Today sees the start of the tennis at Queens Club in West London which is the traditional countdown to the Wimbledon Championship.
Chelski announce that Sarri is off to Juve, no surprise there then nor probably of big Frank who is about to be installed as yet another manager at Stamford Bridge.
Gary Woodland held on for a long time to win the US Open although the usual suspects were chasing him home…
And Tyson Fury saw off another no-hoper in two rounds, what is this heavyweight division like, they are all avoiding each other. Fury has to have a re-match against Wilder, AJ has to get his belts back from Ruiz and then they might meet each other…
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